ANTONY WASTE HANDLING CELL

Current Market Price-: 383 Rs

Antony Waste Handling Cell Ltd is engaged in the business of mechanical power sweeping of roads, collection and transportation of waste, waste to energy project and undertake the designing, construction, operation and maintenance of the integrated waste management facility in Kanjurmarg, Mumbai.

It is one of the top five players in the Indian municipal waste management industry with a track record of ~20 years and among few companies to be listed on the recognized stock exchange.

Incorporated in 2001 , company’s foothold in the solid waste management industry can be traced back since its inception. Commencing business with simple collection and transportation of waste, company today has come a long way in the field of solid waste management. Company also has kept adopting latest technologies and innovations thereby transforming this business itself into a complex operation system with the use of technologies in garbage compaction, processing, use of transfer stations, management of sanitary engineered landfills.

Company has developed in-house expertise in landfill construction and management in a scientific manner. Company is also focusing on the emerging waste management areas like waste-to-energy as well as bio-mining of legacy wastes.

Business 

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Company has presence across three broad business areas: 

First, municipal solid waste collection and transportation projects

This service involves door-to-door collection of municipal solid waste from households, commercial establishment and other bulk waste generators from a designated area through primary collection vehicle. Company has 13 ongoing projects in this service alone. They are typically multi-year contracts and average outstanding duration of our ongoing contracts is approximately seven to eight years.

Second, Municipal solid waste processing projects

This involves sorting and segregating the waste received from municipal solid waste through collection and transportation, where one is expected to generate compost, recycle the waste, segregating and converting inorganic waste into refuse derived fuel as required. Company has two large ongoing waste processing projects; these have tenure of 21 to 25 years. Please note that collection and transportation and municipal processing are normally exclusive contracts. One is at Kanjurmarg, Mumbai, which has a concession agreement till 2036. Second is at Pimpri-Chinchwad and this one has a concession agreement till 2040.

Third business is contract and other services

This involves mechanized sweeping, which utilizes power sweeping machines, manpower, comprehensive maintenance, consumables, etc.

Till now company has undertaken overall more than 25 projects, of which 16 are ongoing projects.

Today It has had geographical presence in 9 states in India through ongoing and completed projects

Services Offered

The company is a pioneer in Municipal Solid Waste (MSW) providing a full spectrum of services, which includes

• Waste Collection & Transportation
• Mechanized and Non-Mechanized Sweeping
• Waste Processing & Treatment
• Waste to Energy

Projects

Having undertaken more than 25 projects till date, of which 18 are ongoing, company has demonstrated a track-record as a comprehensive service provider equipped with the resources to handle large-scale projects for municipalities as well as private players. 

Company’s portfolio of 18 ongoing projects comprised 12 MSW C&T projects, two MSW processing (including WTE) project and four mechanized sweeping projects.

• Thane Municipal Corporation- Thane,
• Municipal Corporation of Greater Mumbai, Mumbai (Borivali & Dahisar)
• Mangalore Municipal Corporation, Mangalore,
• Navi Mumbai Municipal Corporation, Navi Mumbai,
• North Delhi Municipal Corporation, Delhi,
• Greater Noida Industrial Development Authority (GNIDA),
• Jaypee International Sports, Uttar Pradesh
• Ulhasnagar Municipal Corporation, Ulhasnagar
• New Okhla Industrial Development Authority, (NOIDA) (Zone 1, 2 & 3),
• Bioreactor landfill to energy plant & Composting, Kanjurmarg – Mumbai.

Company has in FY 2021 bagged two new projects one for collection and transportation project in Jhansi Smart City and another is a bio-mining project in Greater Noida. They are currently under mobilization, and it is expected that the same would start generating revenue from October 2021. The bio-mining project in Greater Noida, is the first of its kind that the Company has bagged.

Owner of One of Largest Locations in Asia
The company is the owner of one of the largest single-location waste processing plants in Asia. The Kanjurmarg site in Mumbai handles ~5,000 TPD of Solid waste with a total capacity of handling ~7,500 TPD waste.

It has a bio-reactor landfill with a capacity of ~6,500 TPD. Sanitary landfill of 250 TPD and Material recovery and Composting facility of 1,000 TPD.

The site handles ~60% of total waste generated in Mumbai.

New WTE Project

The company entered into the WTE (Waste to Energy) area with the approval of construction of its first WTE plant at Pimpri, Maharashtra with a capacity of ~14 MW of power. The total cost of project will be ~250 crores which will be primarily funded by ~170 crores of debt.

The waste handling capacity of the site will be 1,000 TPD. There are only 5 other such WTE projects till Dec, 2020 in India.

Vehicles Fleet

Presently, the company has a fleet of ~1,150 vehicles out of which ~970 are fitted with GPS tracking devices. ~690 of total vehicles are small tippers, followed by compactors (280) and big tippers (85).

IPO

Company has an IPO in Dec 2020 where company had raised 300 crores from investors. The funds generated from the were to be utilised for the following purposes

• To finance PCMC WTE Project through investment in subsidiaries
• To pay-off company’s consolidated borrowings by infusing debt in Subsidiary-AG Enviro
• To meet general corporate purposes.

Issue price for the share in Ipo were 315 Rs while post IPO the stock had hit 489 Rs thereby giving gains of 55%. However the stock had fallen below the issue price where it hit 52 week low of 241 Rs. 

Now that company has declared results for the year ended fy 20-21 as well as for the q1 fy 21-22 and it seems that company is on the path of forward growth trajectory we at darkhorsestocks thought it to be the right time to cover this stock. We have been watching this stock since over more than a month but as the recent results announced by the company were somewhat more than better the stock has shot up significantly that is more than 15% in just over a week.

Prior to the IPO, Antony Waste Handling Cell Ltd raised ₹90 crore from anchor investors, icluding Massachusetts Institute of Technology, Tata AIG General Insurance Company Ltd, SBI Equity Savings Fund and SBI Infrastructure fund, among others.

Financials

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For Q1 June 2021

• Net Sales at Rs 145.37 crore in June 2021 up 58.6% from Rs. 91.66 crore in June 2020.
• Quarterly Net Profit at Rs. 16.76 crore in June 2021 up 235.53% from Rs. 12.37 crore in June 2020.
• EBITDA stands at Rs. 41.72 crore in June 2021 up 55.09% from Rs. 26.90 crore in June 2020.
• Antony Waste EPS has increased to Rs. 5.93 in June 2021 from Rs. 4.41 in June 2020.

For Q4 2021

• Company reported an operating revenue of Rs. 120 crores as compared to Rs. 118 crores in Q3 2021, registering a growth of 2% on a sequential basis. This is on the back of approximately 11% growth that company had reported in Q3. 
• The total revenue including contract and other revenues grew by 9% sequentially to Rs. 138 crores in Q4 2021 as compared Rs. 127 crores in Q3 2021. 
• EBITDA is down by 6% at Rs. 34 crores during the quarter, with EBITDA margin at 24.7%. The main reason for the decline in margin has been the 15% sequential increase in other operating expenses, mainly driven by higher fuel prices.
• The profit before tax stood at Rs. 19 crores for the quarter as against Rs. 22 crores in Q3 2021. And the profit before tax margin is 13.7% during the quarter. 
• Profit after tax stood at Rs. 16 crores for the quarter as against Rs. 19 crores in the previous quarter.
• The dip in margins was mainly attributable due to the ex-gratia payment that the management has made to its employees in appreciation to their efforts made during the difficult Covid times.

For the Year Ended 2022

• Total operating revenue has risen by 7% from Rs. 402 crores to Rs. 429 crores, the growth being driven by 11% revenue growth in collection & transportation business, which registered a 4.1% volumes de-growth.
• On the balance sheet front, net debt-to-equity as of 31st March 2021, is 0.3x as compared to 0.5x as of 31st December, 2020.
• Total debt as of March 2021 stood at approximately Rs. 150 crores, which compares against Rs. 210 crores last year.
• Net worth has improved to Rs. 442 crores versus Rs. 300 crores last year.

Sectorial Outlook

As per few industry reports, the municipal solid waste management market was estimated at Rs. 5,000 crores in FY 2020 and this is expected to grow at a CAGR of 14.4% over the next five years thereby reaching reaching Rs 9800 crore. Urbanization resulting in changing lifestyle pattern and increasing disposable income has paved way for consumerism and have also contributed to higher waste generation in urban India.

Over the last few years, we have also seen this industry leaning towards technological advancement and this augurs well for our technology driven municipal solid waste service player like us. Various initiatives taken by our government like Swachh Bharat Mission with an allocation of more than Rs. 1.4 lakh crores over a period of five years towards Urban Swatch Bharat Mission 2 is expected to drive growth in Indian municipal solid waste industry. Due to COVID-19 pandemic, the speed of modernization of waste, collection and disposal in our country has hit a road bump, which we feel given the essential nature of the business will be back on track, sooner than later.

Audit Opinion

The company has appointed Walker Chandoik& Co LLP which most probably is a part of Grant Throton. 

Grant Thornton LLP is the American member firm of Grant Thornton International, the seventh largest accounting network in the world by combined fee income.

In the Latest financial Statements of the company, that is in the Annual Report of 2019-2020 Auditors have issued Qualified opinion on the Financial statement. 

The reason why Qualified opinion was presented -: 

The holding company’s internal financial controls over financial reporting with respect to the assessment of loss allowances for trade receivables (as explained in Note no 51 to the consolidated financial statements) were not operating effectively which could potentially result in material misstatement in the carrying value of loss allowances , trade receivables and its resultant impact on profit , reserves and surplus as at the end of the year ended 31st March 2020.

Thus based on the above fact Qualified opinion was issued by the auditing firm.

Conclusion

Antony Waste Handling Cell Ltd is among very few companies engaged in Solid Waste management to be listed on the recognised stock exchange which makes it very difficult for peer group comparison. However based on the pure fundamental aspects company does show good value based on the sales as well as net profit numbers. Sales has been grown consistently at 16% cagr over 5 year period while net profit has grown at 21% cagr over the same period. For the lates quarter Q1 Fy21-22 company has recorded highest ever revenue of 145 crores thereby reporting 55% growth in sales over same period last year. Thus Company has so far shown promising growth and as per the latest management comments some of the new projects as well as the revenue recognition for the past projects is set to be due/available to company in the second half of the current. Additionally company has very low/ sufficient levels of debt with debt to equity ratio of 0.3x which depending upon the capex to be taken by company may increase of decrease. Company currently trades at 20Pe based on the trailing twelve month Pe. Thus this makes the company worth exploring for long term.

This stock has been on our watchlist since over a month now, due to amazing results announced by the company for the first quarter 2021-2022 the stock has shot up to about 15-20% in just over a week. Therefore we would advice users to buy this stock in a staggered manner and not 100% at one go. Additionally we also don’t suggest companies that have recently hit the markets via IPO’s as there is tendency among the companies to inflate the results to some extent but the key reason for suggesting this specific stock is that it belongs to the sector and operates in a segment which currently  very few companies are into and so far as the listed companies go extremely handful of the companies are available. Thus, this stock has specifically been suggested from a diversification perspective while this is also a very risky stock as compared to other darkhorsestock ideas.

There may be some inherent limitations and no matter how hard we try , we still may not be able to be 100% sure if there exits any uncertainties in the company. Some ideas may fail and users need to understand the risk on investing in the equity markets.Therefore users are requested to do their own research before taking any decision. Darkhorsestocks or any of its members would not be responsible for any loss.